Acct 301 Homework – Chapter 9

Chapter 9 E9-6, E9-11, P9-1A, P9-5A E9-6 SY Telc has recently started the manufacture of RecRobo, a three-wheeled robot that can scan a home for fires and gas leaks and then transmit this discipline to a mobile phone. The make up structure to manufacture 20,000 RecRobos is as follows. Cost Direct materials ($40 per robot) $800,000 Direct labor ($30 per robot) 600,000 Variable overhead ($6 per robot) 120,000 Allocated fixed overhead ($25 per robot) 500,000 fare $2,020,000 SY Telc is approached by Chen Inc. which offers to make RecRobo for $90 per unit or $1,800,000. book of instructions (a) Using incremental analysis, throttle whether SY Telc should accept this offer under each of the following independent assumptions. * (1) Assume that $300,000 of the fixed overhead cost can be decrease (avoided). * (2) Assume that none of the fixed overhead can be reduced (avoided). However, if the robots are purchased from Chen Inc. , SY Telc can use the released productive resources to g enerate additional income of $300,000. * (b) Describe the qualitative factors that skill affect the decision to purchase the robots from an outside supplier. E9-11 Twyla Enterprises uses a computer to handle its gross sales invoices.Lately, business has been so good that it takes an extra 3 hours per night, plus every third Saturday, to keep up with the volume of sales invoices. Management is considering updating its computer with a faster model that would eliminate all of the overtime processing. up-to-date Machine New Machine Original purchase cost $15,000 $25,000 Accumulated depreciation $6,000 Estimated annual operating(a) costs $24,000 $18,000 Useful life 5 years 5 years If sold now, the current political machine would have a salvage value of $5,000. If operated for the remainder of its useful life, the current machine would have zero salvage value.The new machine is expected to have zero salvage value after vanadium years. Instructions Should the current machine be r eplaced? P9-1A Pro Sports Inc. manufactures basketballs for the National Basketball Association (NBA). For the first 6 months of 2008, the company reported the following operating results while operating at 90% of plant qualification and producing 112,500 units. Amount Sales $4,500,000 Cost of goods sold 3,600,000 Selling and administrative expenses 450,000 Net income $450,000 Fixed costs for the terminus were cost of goods sold $1,080,000, and selling and administrative expenses $225,000.In July, normally a slack manufacturing month, Pro Sports receives a spare order for 10,000 basketballs at $28 each from the Italian Basketball Association (IBA). Acceptance of the order would gain variable selling and administrative expenses $0. 50 per unit because of shipping costs but would not summation fixed costs and expenses. Instructions * (a) stand up an incremental analysis for the extra order. * (b) Should Pro Sports Inc. accept the special order? Explain your answer. * (c) Wh at is the minimum selling price on the special order to produce interlock income of $4. 10 per ball? (d) What nonfinancial factors should management consider in making its decision? P9-5A Lewis Manufacturing Company has 4 operating divisions. During the first quarter of 2008, the company reported aggregate income from operations of $176,000 and the following divisional results. theatrical role I II III IV Sales $250,000 $200,000 $500,000 $400,000 Cost of goods sold 200,000 189,000 300,000 250,000 Selling and administrative expenses 65,000 60,000 60,000 50,000 Income (loss) from operations $(15,000) $(49,000) $140,000 $100,000 Analysis reveals the following percentages of variable costs in each division. I II III IV Cost of goods sold 70% 90% 80% 75% Selling and administrative expenses 40 70 50 60 Discontinuance of any division would save 50% of the fixed costs and expenses for that division. exit management is very concerned about the unprofitable divisions (I and II). Consensus is that one or both of the divisions should be discontinued. Instructions * (a) Compute the contribution margin for Divisions I and II. (a) I $84,000 (b) Prepare an incremental analysis concerning the possible discontinuation of (1) Division I and (2) Division II. What course of action do you recommend for each division? * (c) Prepare a columnar condensed income statement for Lewis Manufacturing, assuming Division II is eliminated. Use the CVP format. Division IIs unavoidable fixed costs are allocated equally to the continuing divisions. (c) Income III $133,850 * (d) Reconcile the total income from operations ($176,000) with the total income from operations without Division II.